Tim Hortons plans American blitz

Restaurant chain aims to bring in more U.S. customers with new menu items and additional locations

Tim HortonsCanada-based Tim Hortons wants to win over new American customers with additional menu items, including a sub sandwich called the Extreme Italian, top; a crispy chicken sandwich; and frozen hot chocolate.

Tim Hortons is big in its home country of Canada but not nearly as much in the U.S. — at least as of yet.

This year, the chain embarked on a mission to increase its presence and its sales in this country. New menu items — frozen hot chocolate, Italian sub sandwiches, even kettle chips in some markets — are part of the push.

Some analysts say these and other changes could put the company on the right track stateside, but some local customers seem content with getting “the usual.”

Tim Hortons opened in 1964 and has had U.S. locations since 1986. The company, which maintains its U.S. headquarters in Columbus, plans to add 300 U.S. locations over the next five years after adding 74 last year.

Hortons’ 3,610 Canadian stores had $153.5 million in operating income in the first quarter, according to the company report, while the 870 U.S. stores took in $4.4 million.

“We characterize our U.S. operations as a must-win battle,” said Marc Caira, Hortons’ CEO, during a conference call last month with analysts in connection with first-quarter earnings.

One of the fronts in this battle is to increase sales at existing stores, and that’s where the menu changes come in. Many of those items — and sandwiches in particular — bolster options during the lunch hour and after.

“In our core and priority markets, people know us for breakfast, but we need to convert that awareness into traffic in other (parts of the day),” he said.

The second front is to increase its presence in U.S. markets.

The company’s strategic plan calls for franchises in cities such as Youngstown; Fort Wayne, Ind.; and St. Louis.

“It’s vastly different. I mean, they are the 900-pound gorilla in Canada — they might even be the 9,000-pound gorilla in Canada,” said Dennis Lombardi, executive vice president of food-service strategies at Columbus-based WD Partners, a customer-experience firm.

“They are extremely well-rated by the Canadian consumers.”

Meanwhile, in the U.S., Tim Hortons was ranked No. 43 on QSR magazine’s 2013 top 50 list, up three spots from the previous year. The list ranks the top 50 quick-service and fast-food restaurants by sales.

In the snacks segment of those ratings, Tim Hortons ranked No. 4 out of six against competitors Starbucks, Dunkin’ Donuts, Krispy Kreme, Baskin-Robbins and Jamba Juice.

Among the new items to be offered in the U.S. are a frozen hot chocolate, which is priced at $2.49 for a 12-ounce drink; an “extreme Italian” sandwich, which costs $4.69; a crispy chicken sandwich priced at $3.99 and being tested in Buffalo, N.Y.; and kettle chips, which are also being tested in Buffalo and cost $1.99 for a large serving, said spokeswoman Brynn Burton.

The chicken sandwich and kettle chips are also planned for a nationwide launch later this year, Burton said.

The company’s strategic plan noted an “increasing desire for balanced menu options to address interest in health, wellness and nutrition.”

Some customers, though, said they’re sticking to their regular orders.

Frank Ruddy, a 75-year-old Columbus resident, said he gets a coffee, sandwich and muffin daily.

“The food is fresh, the restaurant is clean,” Ruddy said. He said he hasn’t tried any new items.

Columbus resident Margery Spence said she visits the Tim Hortons at Broad and High streets about once a week because it’s convenient to Downtown.

She said she hasn’t tried any of the new items but would be willing to.

“I just usually get coffee and doughnuts,” Spence said.

Burton said Tim Hortons is branded as a cafe and bake shop in the U.S., making it more of a destination for sitting down to “enjoy with friends that midafternoon treat.”

Lombardi said shifting toward that cafe vibe is smart.

“They’re migrating away from the breakfast, bakery, coffee, doughnut (shop) into much more a bakery-cafe,” Lombardi said, “which, by the way, I think is very good positioning for the brand to do.”

Darren Tristano, executive vice president of Technomics, said he also thinks the shift toward healthier and better-quality products will benefit sales.

“I think they’re on target with what U.S. consumers are accustomed to and what they’re looking for,” he said. “They’re definitely the leader in Canada, and they’re much smaller in the States but they are growing.”

Lombardi said he thinks the company will continue to look at its menu critically and adapt as it sees fit.

“In many cases, it’s a learning curve that has to go on, and what we’re seeing with Tim Hortons is exactly that,” Lombardi said.

Tristano said Tim Hortons, which has most of its U.S. locations in the Midwest, is well-positioned to take on its top two competitors.

“They certainly have opportunity to expand, and we’ve seen Dunkin’ Donuts do well moving to the west and Starbucks moving to the east,” he said. “And there’s a lot of middle ground.”

Lombardi said Tim Hortons is still an emerging brand in the U.S., “so I really think that consumers are still learning about the brand.”

“Like many brands, when they move out of their heritage markets, they have to learn … to build consumer loyalty, and that takes time. And I think they’re doing it.”